Building a few long range missiles and launching 1-3 satellites a year by Government entities that operate with limitless budgets is very different from setting up a fab that needs to make money. SMIC and GSMC in China have never turned a profit. Chartered Semi in Singapore posted losses for 10 years before it was acquired by Global Foundries. What chance does a fab have in India, with its creaky infrastructure? @scalingforever: Lack of a fab does not have to stymie growth of design houses. There are plenty of large companies (Nvidia, Qualcomm) and startups in the US that are doing just fine despite having to work with Taiwanese foundries.

The Nuclear power plants, the long range missiles etc are technologies that don't change as rapidly as the Semiconductor manufacturing. Besides they have been in India for more than 10 years... Getting into a fab business is a whole new scenario. The record is every time they have announced something, only politicians have made a killing profiting off the land (Fabcity in Hyderabad). They have a fab at BHEL (I think it 3micron 5" wafers) in Bangalore.. They have water, power and 150 acres of eucalyptus trees... They don't have a vision. Naturally they won't set it up there. They will select another spot.. Politicians will buy the land around it and corruption will make sure no fab comes up...We will wait for the next announcement in another 6 mos.....

India should build a fab because it makes business sense. Growth of design houses has been stymied by lack of access to a fab. It is also very unlikely for a IDM to step-in a build a fab. In this scenario, the most suitable vehicle is a foundry. There is sufficient domestic market to support such a fab; it could also be a source of IC's for sub-assemblies that might be exported. I might pick 90nm/65nm as the technology since the sweet-spot for Indian market is most likely to be automotive and embededd devices.
People promising the end of the world for this fab seem to be misinformed; there already exist numerous industries that require a constant 7x24 power-supply.

If India can build Nuclear power plants, develop long range missiles and satellite launch vehicles ( and that also by the 100% govt owned and controlled R & D organizations )then off course it can build its own Fab with an able technical partner and political will ( which has already been expressed)

If I were an Indian decision maker, I would turn to China for this. Geopolitically, India and China have not seen eye to eye for decades, but that's a relic of the cold war. The Indians should do everything possible to have a friendly and privileged relationship with China, and integrate with other Asian economies.

If this takes off anytime soon it could be a disaster in the making. The world over companies are shedding fabs like britney takes off clothes and here we see some beaurarcats totally ignorant of market realities pushing some grand idea.
This country has been experiencing continuous power shortage for decades, I wonder how they would feed the Fab and when would it break even? I bet this thought didn't even cross their mind.

Although India may have many technologists and engineers with advanced degrees, their lack of experience will eventually make US-based industry realize that although India may have a lower cost (Salary)the US company would save money by returning manufacture to the USA.

Building and operating a fab requires a certain ecosystem: reliable power, clean water, a trained and educated workforce, ease of material movement in/out of the country. India is sorely lacking all of these. Even a relatively low tech industry like Solar cell manufacturing is unable to take root. As "chipmonk" said, the country should start lower in the value chain and slowly build up the infrastructure and capability needed to move up. Otherwise this will end up just like previous manufacturing initiatives: started on the whim of a half-educated politician and leading nowhere.

Regardless of facts, my dream is to see India as a manufacturing country. And, I see nobody controls the financial as well as technology market, in practical. It happens just like how USA got into recession, how Japan moved almost all of manufacturing to China, Thai, Philippines, and how India become giant in "software services". If US companies do not sell technology to India or China, they cannot see the profit. If India is like US, then it cannot provide services at cheaper rates. Its a big equation of human minds. So, I hope that also will happen soon.

In conjunction with unveiling of EE Times’ Silicon 60 list, journalist & Silicon 60 researcher Peter Clarke hosts a conversation on startups in the electronics industry. One of Silicon Valley's great contributions to the world has been the demonstration of how the application of entrepreneurship and venture capital to electronics and semiconductor hardware can create wealth with developments in semiconductors, displays, design automation, MEMS and across the breadth of hardware developments. But in recent years concerns have been raised that traditional venture capital has turned its back on hardware-related startups in favor of software and Internet applications and services. Panelists from incubators join Peter Clarke in debate.